Join ABRIGO for this complimentary webinar on: Tuesday, May 4, 2021 at 1:00 PM ET / 12:00 PM CT. 
 
Expanding PPP Relationships For Long-Term Success
Register Now
PPP loans have created countless new business customers for banks and credit unions. The challenge now is, how do you convert those loans into full banking relationships? The answer is simple, but the process takes commitment.
In this webinar, Chris Carlson, Managing Director of Core Academy, will provide a process that you can use to convert many of these PPP transactions into lifetime customer relationships.
 
You will learn:

• How to secure the intial meeting
• How the initial meeting creates value for the customer and a roadmap for your relationship
• How to provide on-going value for the customer while expanding the bank’s relationship

 

Congress passed ICBA-advocated legislation to extend the Paycheck Protection Program ahead of its March 31 expiration, sending the extension to President Joe Biden to sign into law.
 
Background: Under existing law, any application not approved by March 31—even if it was submitted prior to that date—cannot receive PPP funds. The newly passed bill allows borrowers to apply for loans through May 31 and gives the SBA until June 30 to consider applications.
 
ICBA Position: ICBA strongly supported the two-month extension to ensure small-business and nonprofit applicants are not stranded by an abrupt shutdown.
 
What's Next: With the PPP extended, ICBA continues urging Congress and the SBA to make program fixes related to eligibility, use of proceeds, farm partnerships, and Schedule C borrowers.
 
More: PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.
 

With the Senate expected to vote this week on House-passed legislation to extend the Paycheck Protection Program, ICBA is urging community bankers to contact their senators in support.
 
The Bill: The ICBA-backed bill—which the House passed last week on a 415-3 vote—would allow borrowers to apply for loans through May 31 and give the SBA until June 30 to consider applications.
 
Taking Actions: ICBA's Be Heard grassroots action center makes it easy for community bankers to urge their members of Congress to extend the PPP before it expires March 31.

​The SBA released its new interim final rule and new application forms implementing Paycheck Protection Program changes for sole proprietors and other borrowers that file IRS Form 1040, Schedule C. An SBA webinar on the updates is scheduled for today.
 
Key Provisions:

• The new IFR includes a revised loan calculation formula for Form 1040, Schedule C sole proprietors, independent contractors, and self-employed individuals using gross income instead of net income, as advocated by ICBA.
• The rule spells out the calculation for these borrowers in two ways: those with no employees and those with employees.
• Schedule C filers using gross income to calculate loan amounts with more than $150,000 in gross income will not automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith. These borrowers may be subject to a review by SBA of their certifications.
• The rule also sets aside $1 billion for PPP loans to businesses in this category that do not have employees and are located in low- or moderate-income areas.
• The higher loan amounts for Schedule C borrowers apply to applications filed after the rule’s effective date. Loan amounts cannot be increased once the loan is disbursed to the borrower, so lenders and borrowers may wish to cancel loans that have not yet been disbursed and reapply using the new Schedule C application form.
• The rule also includes provisions on small-business owners delinquent on their federal student loans or with prior non-fraud felony convictions and non-citizen small-business owners who are lawful U.S. residents.

 
Resources from SBA:

• The interim final rule
• Updated frequently asked questions

 
For Lenders:

• More Lender Information
• Updated Lender Application Form
• Updated Second Draw Lender Application Form

 
For Borrowers:

• More Borrower Information
• Updated Borrower Application Form
• Updated Second Draw Borrower Application Form
• Borrower Application Form for Schedule C Filers Using Gross Income
• Second Draw Borrower Application Form for Schedule C Filers Using Gross Income

 
Webinar Today: The SBA is scheduled to hold a Microsoft Teams webinar on these updates at 4 p.m. (Eastern time) today, March 4.
 
More: Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.

The SBA said it will "soon" publish a new Paycheck Protection Program interim final rule and issue a new application for Schedule C filers. Until then, it issued the following considerations:

• The new definition of “payroll costs” for Schedule C filers will be available for loans approved after the effective date of the interim rule. To use the new definition, applicants must use the new application form (SBA Form 2483-C or SBA Form 2483-SD-C).
• Lenders who have submitted the current application form to the platform and have not yet been approved may withdraw the application from the platform.
• If the application has been approved but the loan has not yet been disbursed, lenders may cancel the loan and the applicant may apply for a new loan using the new application form.
• If lenders have disbursed the loan but have not yet filed the related Form 1502, they may cancel the loan and applicants may repay and apply for a new loan using the new application form.
• If lenders have disbursed the loan and filed the related Form 1502, the loan cannot be canceled.
• Loans cannot be increased to take advantage of the new definition.

More: Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.

Second Draw (PPP2) loans include a requirement for the applicant to evidence a 25% reduction in revenue, and the 2483-SD borrower application has the following definition: “Gross Receipts of a borrower must be aggregated with gross receipts of its affiliates.”
 
Below are a few questions in this regard. If possible in responses, it would also be great if there can be reference where in the Interim Final Rule or FAQs answers can be found:
 

1. What are some of the best practices for reviewing companies with multiple affiliates, i.e. are you requesting consolidating financial statements to avoid intercompany revenue?
2. If the entity applying for a PPP2 loan has a 25% reduction in a specific quarter of 2020 compared to 2019, would the applicant need to supply financial information for the same quarter for all affiliates? 
   
3. Is there guidance that states that if the aggregated gross receipts does not reach at least a 25% reduction, then the applicant and all affiliated businesses are ineligible for PPP2 loans?
4. Regarding #3 above, If aggregate gross receipts is at least 25%, does that mean the entity and all affiliated businesses (even if an affiliate on its own does not meet the standard) are eligible for PPP2 loans? 
5. Is it confirmed that for NAICS code 72 (and a couple other specific codes) affiliation rules are waived for both number of employees and aggregating affiliate financials (as long as there are no more than 300 employees per location). 
   

The Biden administration announced several Paycheck Protection Program reforms to target the program to the smallest businesses.
 
The updates include:

• A 14-day period, starting Wednesday, during which only businesses with fewer than 20 employees can apply for PPP relief. During this period, however, applications already in the pipeline or requiring error resolution will continue to be processed.
• Revising the loan calculation formula for sole proprietors, independent contractors, and self-employed individuals to use gross income instead of net income, as advocated by ICBA. Additional details are expected on whether this will be limited by number of employees or otherwise. Further, $1 billion will be set aside for PPP loans to businesses in this category without employees located in low- and moderate-income (LMI) areas.
• Eliminating restrictions preventing small-business owners delinquent on their federal student loans or with prior non-fraud felony convictions from qualifying for the PPP.
• Ensuring access for non-citizen small-business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers to apply for relief.

The administration also said it has revised the PPP loan applications to encourage self-reporting of demographic data, and it will conduct stakeholder outreach on PPP challenges. The SBA also will launch an initiative to enhance lender engagement with opportunities for lenders to provide recommendations and ask questions about the PPP and obtain resolution of open questions and concerns in a more streamlined way.
 
Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.

Insured depository institutions under $10 billion in assets have made more than half of 2021 first- and second-draw Paycheck Protection Program loans, according to SBA data.

The latest breakdown shows these institutions have approved more than 453,000 PPP loans worth $39.4 billion out of the total count of 891,044 loans worth $72.7 billion approved through Jan. 31.

Of the 2021 PPP loan total, nearly $68 billion has been approved for second-draw loans and nearly $4.8 billion for first-draw loans.
​
Additional PPP information and resources are available on the SBA and Treasury sites, ICBA's PPP and EIP News page, the Independent Bankers Association of Texas's matrix of PPP updates in the stimulus law, and ICBA's summary of the stimulus package's community banking provisions.

SBA, in continuing  established communications messaging, provides the following:
 
Information Notice 5000-20087 – Updated Section 1112 Tax Implication Reporting Requirements

https://www.sba.gov/document/information-notice-5000-20087-updated-information-irs-information-reporting-relating-payments-made-behalf-borrowers-under-section
 
 
Procedural Notice 5000-20089 – Extend 7(a) and 504 Electronic Signatures through 4-30-21
 
https://www.sba.gov/document/procedural-notice-5000-20089-extension-previous-guidance-acceptable-signatures-applications-loan-documents-7a-504-business-loan
 
 
Procedural Notice 5000-20090 – Extend Microloan Electronic Signatures through 4-30-21

https://www.sba.gov/document/procedural-notice-5000-20090-extension-guidance-acceptable-signatures-microloan-program-notes
 
 
Procedural Notice 5000-20088 – Extend Microloan Closings through 4-30-21

https://www.sba.gov/document/procedural-notice-5000-20088-extension-temporary-procedures-closing-sba-loans-microloan-intermediaries

From ICBA
​
The SBA said it is working to improve reviews of first-draw Paycheck Protection Program loans. The agency said anomalies—mostly data mismatches and eligibility concerns—were identified in approximately 4.7 percent of lender-submitted data.
 
The SBA said these concerns will require follow-up between lenders and borrowers so borrowers can access a second round of loans. It encouraged borrowers and lenders to work together as quickly as possible to resolve the issues.
 
Announcing that it has approved more than 400,000 loans for approximately $35 billion during the newest round of PPP lending, the SBA also said it is planning additional guidance for lenders while equipping field teams with information to help lenders and borrowers.
 
Additional PPP information and resources are available on the SBA and Treasury sites, tomorrow's ICBA Community Bank Briefing, ICBA's PPP and EIP News page, the Independent Bankers Association of Texas's matrix of PPP updates in the stimulus law, and ICBA's summary of the stimulus package's community banking provisions.

In classic SBA style, there’s been a lot of updates on PPP over the last few days – and we’re sure your members will benefit from the run down from Abrigo.  Whether they decide to partner with Abrigo or not for origination of these loans, these resources will help all of your members navigate this round of PPP.
 
Materials to share:
 
Abrigo has begun supporting community financial institutions participating in the latest round of PPP through its Sageworks SBA Lending solution. Customers leveraging the solution can simplify and automate the underwriting processes of PPP so you can quickly get money into the hands of small business owners. Learn how you can get implemented and begin automating PPP loans within 48 hours.
 
Press Release – Abrigo is Ready & Customers are Live
Webinar Recording – What’s Changed with PPP in 2021
PPP Live Demo – First is Tuesday (1/12) at 3 PM EST, and we’ll be adding additional dates and times each day
Blog post – Lender guidance for borrowers wanting a second loan

​WASHINGTON – The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, announced today that the Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13.  The PPP will open to all participating lenders shortly thereafter. Updated PPP guidance outlining Program changes to enhance its effectiveness and accessibility was released on January 6 in accordance with the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan.
“The historically successful Paycheck Protection Program served as an economic lifeline to millions of small businesses and their employees when they needed it most,” said Administrator Jovita Carranza.  “Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery.”
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” said Treasury Secretary Steven T. Mnuchin.  “This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19.  We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
(more)
 
Key PPP updates include:

• PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
• PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
• The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
• The PPP provides greater flexibility for seasonal employees;
• Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
• Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan. 

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

• Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
• Has no more than 300 employees; and
• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

 
The new guidance released includes:

• PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
• Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
• Interim Final Rule on Second Draw PPP Loans.

 
For more information on SBA’s assistance to small businesses, visit sba.gov/ppp or treasury.gov/cares. 
 
###
 
 
About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of business ownership. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
 

With the Senate bringing two separate measures that include Paycheck Protection Program forgiveness simplification to a vote starting today, ICBA continues calling on community bankers and their small-business contacts to weigh in with lawmakers.
 
ICBA's Be Heard grassroots action center allows community bankers and small-business owners to urge Congress to address the deduction of Economic Injury Disaster Loan advances from PPP loan forgiveness. ICBA encourages community bankers to direct borrowers to the small-business alert.
 
While borrowers may receive up to a $10,000 EIDL advance, those funds will be deducted from PPP loan forgiveness. ICBA has repeatedly raised this issue with Congress and the SBA, reiterating it Monday in a new joint message to lawmakers.
 
Meanwhile, ICBA continues calling on community bankers and small-business owners to urge Congress to immediately pass bipartisan legislation to simplify PPP forgiveness.
 
While the Senate measures are not expected to pass amid ongoing stimulus talks, ICBA continually works to ensure these PPP priorities remain a key part of the debate.
 ​

​ICBA: Exclude PPP loans from asset calculationsICBA called on Congress to direct federal regulators to exclude Paycheck Protection Program loans from bank and bank holding company asset threshold calculations.
 
In letters to House and Senate leaders, ICBA noted that the surge of PPP loans has swelled the balance sheets of community banks. Absent a legislative fix, asset-size growth will inadvertently push many community bankers over regulatory thresholds and subject them to additional supervision, regulations, and costs.
 
Whereas banks normally have advanced notice that they are close to crossing an asset threshold and invest in a strategic plan to comply with additional regulations, rapid asset increases due to PPP lending have caused temporary balance sheet inflation.
 
"This is an exceptional circumstance and bank regulation must be flexible enough to account for it rationally and ensure that PPP lenders are not punished with regulatory costs simply for their participation in an emergency program," ICBA wrote.

 The Independent Community Bankers of America (ICBA) today said recently released data show that community banks are the unequivocal leaders of the U.S. economic recovery due to their outsized role as providers of Paycheck Protection Program (PPP) small-business loans.
According to the Small Business Administration data, community banks:

• Were the predominant PPP lenders, serving 57.5 percent of all PPP recipients and 48.1 percent of all U.S. small businesses with 2.8 million loans.
• Supported underrepresented small businesses, providing most loans to minority-owned (72.6 percent), women-owned (71.5 percent), and veteran-owned small businesses (63.4 percent).
• Served communities of all kinds, making PPP loans in 98.2 percent of low-income or economically distressed counties, 96.6 percent of rural counties, and 92.4 percent of urban counties.
• Had the faster turnaround times among lenders, processing PPP loans five to 10 days faster than other PPP lenders.
• Saved jobs in critical areas of the economy, with nearly half of the 33.7 million jobs they saved part of the accommodation and food services, health care and social assistance, retail trade, and manufacturing sectors.

 "The Paycheck Protection Program data clearly demonstrate community banking’s leading role in the nation's economic response to the COVID-19 pandemic," ICBA President and CEO Rebeca Romero Rainey said. "As American consumers and small businesses in urban, suburban, and rural communities grapple with historic challenges, they can rest assured that their local community bank is there for them every step of the way."
ICBA and community bankers continue calling on Congress to advance needed PPP reforms in the next stimulus package.

With Congress continuing to debate the next economic stimulus package, community bankers can continue using ICBA's Be Heard grassroots action center to weigh in with recommendations.
ICBA's custom message encourages lawmakers to advance a more straightforward approach to Paycheck Protection Program loan forgiveness as well as capital, accounting, and tax relief.
Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza are scheduled to testify before the House Small Business Committee this Friday on the federal pandemic response.
ICBA last week released talking points and a sample letter to borrowers about the agencies' release of information about individual PPP loans. ICBA also offers a sample press release and op-ed on PPP efforts on its Tell Your Story toolkit.

Following the SBA and Treasury Department release of information about individual Paycheck Protection Program loans, ICBA released talking points and a sample letter to PPP borrowers about the agency announcement.
The member-protected talking points and letter template note that the federal agencies—not community banks—released the loan-level information. The resources are available to help community banks who receive questions from PPP borrowers.
The SBA and Treasury released business names, addresses, lender names, and other information for loans of $150,000 and up, which account for nearly three-quarters of the dollar volume of PPP loans. For loans below $150,000, the agencies will not release business names but will report loan totals, aggregated by ZIP code, industry, business type, and various demographic categories.
Overall, SBA and Treasury said the 4.9 million PPP loans have supported more than 51 million jobs and more than 80 percent of small-business employees, with 27 percent of program funds reaching low- and moderate-income communities.
The data release follows the extension of the PPP application deadline until Aug. 8 shortly after the SBA stopped accepting PPP applications last week. The agency has roughly $130 billion in remaining PPP funds.
ICBA continues urging community bankers to use its Be Heard grassroots action center to recommend reforms to include in the next economic relief package, which Congress is debating now. Community bankers can also access ICBA’s Tell Your Story toolkit for a sample press release and op-ed to share the positive impact of their PPP efforts.

The data release also includes overall statistics regarding dollars lent per state, loan amounts, top lenders, and distribution by industry.  The loans have reached diverse communities proportionally, across all income levels and demographics.
In addition, the data provides information regarding the sizes of participating lenders and participation by community development financial institutions, minority depository institutions, Farm Credit System institutions, fintechs and other nonbanks, and other types of lenders.  It further contains data showing the reach of the program in underserved communities, rural communities, historically underutilized business zones (HUBZones), and participation by religious, grantmaking, civil, professional, and other similar organizations.
View the Paycheck Protection Program Report through June 30th.
Loan-level data.

The Senate passed legislation to extend the Paycheck Protection Program application deadline until Aug. 8, sending it to the House hours before the SBA stopped accepting PPP applications.

The bill, which the Senate passed via unanimous consent, needs to be approved by the House and signed by the president to take effect. After the SBA has approved $520.6 billion in PPP loans through Tuesday evening, the program has roughly $130 billion in remaining funds.

The Senate bill also would decouple the PPP reauthorization from the SBA's 7(a) program to avoid shutting it down when the PPP expires. Politico reported that the Senate extended the PPP into August to give Congress time to pass the next economic relief package, which lawmakers are debating now.
​
ICBA continues calling on community bankers to use its Be Heard grassroots action center to provide lawmakers with comprehensive policy recommendations as Congress considers the next relief package.

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